Maryland Governor Martin O'Malley
Maryland state officials are cobbling together a gas tax increase that many say has a strong chance, this time, of being approved by the State House and Senate.
According to the AP and Washington Post, Maryland Governor Martin O'Malley's plan would apply a new 2 percent sales tax on gasoline starting in July. The tax would increase to 4 percent in July, 2014. O’Malley’s plan also would reduce the current excise tax on a gallon of gas by 5 cents, from 23.5 cents to 18.5 cents. The plan would then index the excise tax to the consumer price index to adjust for inflation.
But make no mistake about it, Marylanders will pay more at the pump. Senate Majority Leader Robert Garagiola says drivers will pay around two cents more per gallon beginning in July with a 7 cents per gallon bump to be implemented by July 2014.
"I don't think it's going to be easy to pass this, but it's not insurmountable," he said.
By fiscal year 2018, the plan would generate an estimated $833 million in new funding for transportation, once new bonding capacity created by the additional revenues is added into the mix. Overall, in a five-year period, the plan would create $3.4 billion for Maryland highway and transit projects, according to the O’Malley administration, AP reports.
The new tax plan carries with it provisions that would make it more difficult for the governor to tap Transportation Trust Fund revenue to pay for non-transportation items. O'Malley had apparently siphoned transportation dollars in the past for other projects so this measure is not without justification.
Additionally, the plan also would index Maryland Transit Authority fares to the consumer price index. And frankly that's a smart approach.
The plan includes providing a portion of the money raised by implementation of the federal Marketplace Equity Act, which would enable states to apply the sales tax to Internet sales. However, it’s unclear if Congress will pass the measure. If it is not enacted, the governor’s bill provides for increasing the sales tax another 2 percentage points, from 4 percent to 6 percent.
Interestingly enough, an editorial in the Baltimore Sun supports the aggressive tax hike. It said the governor's complicated proposal "...wouldn't represent our first choice in how best to pay for Maryland's transportation needs. But, on balance, it's a better-than-expected solution to a problem that has been nagging the State House for two decades."